When the offer on your home is accepted, you’ll start the process of securing the mortgage for your home. Lenders will give you the option to lock or float your mortgage rate prior to closing (which typically happens 30 days after the offer is accepted).
“Locking” your mortgage means that you and your lender have agreed on an interest rate and price for your home loan. Once your loan is locked, that’s the rate and price you get, regardless of what happens in the financial markets. If rates go up, you’re protected; but if rates go down, you won’t benefit either — you close your loan at the rate you’ve locked and you can’t change it. Locks have expiration dates ranging from 30 to 60 days or more, and the longer your lock period, the more it costs. If you don’t close your loan on time, you could end up paying a higher interest rate.
Every day, LendingTree posts our recommendation (below) on whether you should lock or float your rate, so make sure to check back here prior to making your decision.
It is looking as if mortgage rates might hold steady today, or perhaps just inch either side of the neutral line. However, that prediction is based on early market trends, and those frequently change speed or direction during the day. So a sharper rise or fall remains possible. Still, if we were currently buying a home, we would lock our rate now. Read on to discover why you might prefer to float.
Our forecast could be undermined in coming hours by any economic, political, and geopolitical news that might affect the American and global economies. This morning’s industrial production figures were mixed, with the headline number beating expectations but others falling short. There is a U.S. Treasury auction of four-week bills on today’s calendar, but they are probably too short-term to have much impact.
Average rates for 30-year fixed-rate mortgages inched up yesterday. That took them just above the one-month low seen last Friday. And that low came exactly one week after they reached a two-month high. Those movements might sound like real volatility, but the difference between the two extremes was quite small. In other words, rates have changed little over the past few weeks. Were recent falls a new trend or merely a blip in a longer upward one? Nobody yet knows. So, given how little rates have been moving recently, you might prefer to gamble by floating today.
What actually happens next will depend on whether relevant news becomes more or less positive in coming hours and days. Absent other factors, good news tends to push mortgage rates up, while bad news usually pulls them down. Nobody can be certain of the future, so you are taking a chance whether you float or lock. Only you can decide on the level of risk with which you are comfortable.
LendingTree makes getting a mortgage easy! Below are the steps to take to make your mortgage process as seamless as possible: